USDCAD Range 1.2998-1.3101    

China surprised markets and devalued the yuan by 2%, the first devaluation in 20 years. Asia FX traders bought dollars across the board but those moves started to retrace in Europe, except for the Commodity bloc).  As of 6:15 am PDT,  Aussie was the biggest loser (down 1.2%) followed by kiwi (0.75%) and then the Canadian dollar.(0.60%)

In Europe, EURUSD climbed from 1.0960 to 1.1045 without any specific driver for the move which may have been due to yesterday’s Fed speakers muddying the rate hike outlook. They may also have been impressed with news that Greece and its creditors have agreed to the outlines of a bail-out package. EURUSD continued to gain in early New York trading.

USDCAD was a yo-yo. It soared from 1.2997 to 1.3100 in Asia dropped right back to 1.3000 in early European trading and has bounced back to 1.3090 where it sits now (6:15 am PDT). USDCAD traders are torn between the effect of the China devaluation on commodity prices and the wishy-washy Fed messages, yesterday.

USDCAD has ignored the as-expected” housing starts data (193,000) but not the slow leak in WTI prices. Oil started the New York session at $44.23 and has slipped down to $43.40, undermined by concerns that the slowdown in China is accelerating.

Technical Outlook

The intraday technicals are mixed-bearish near 1.3100 and bullish at 1.3000. The short term uptrend from midJune remains intact above the 1.2990-1.3000 area while a series of lower highs from the 1.3210 peak may contain USDCD gains at 1.3160.  For today, USDCAD support is at 1.3030 and 1.2990.  Resistance is at 1.3100-10, and 1.3150.

Today’s Range 1.3030-1.3110

Chart: USDCAD 4 hour with short term uptrend